The Pythagoras Alpha Long Biased Strategy offers a sophisticated investment approach, combining Bitcoin (BTC) with two uncorrelated strategies to generate returns that exceed traditional buy-and-hold positions.

In 2024, Bitcoin, the largest cryptocurrency by market capitalization, posted a 121% increase, reaching over $100,000. While this was an impressive performance, the Pythagoras Alpha Long Biased Strategy outshone it, delivering an extraordinary 204% return. This result is more than double the 2x gain typical Bitcoin investors would have realized with a simple buy-and-hold strategy.

According to Pythagoras, the Alpha Long Biased Strategy achieved a threefold return on its investments in 2024. The fund only charges an incentive fee if it outperforms Bitcoin’s returns, making it a performance-based model. The strategy integrates a BTC base position for long-term appreciation alongside two uncorrelated strategies: a momentum market timing strategy and a long-short market selection strategy. These strategies work together to generate additional alpha.

The momentum strategy leverages machine learning and pattern recognition to optimize exposure in response to market trends, enabling the fund to capture short-term fluctuations. Meanwhile, the long-short strategy applies a proprietary AI-driven forecasting model to create a balanced, dollar-neutral portfolio. This strategy invests in tokens expected to deliver high returns while shorting those predicted to underperform.

The allocation across these three components is fine-tuned to maximize overall returns relative to Bitcoin.

Despite its superior returns, the Alpha Long Biased Strategy remains Pythagoras’ smallest fund, with assets under management (AUM) totaling $7 million. The fund did face a 2% drawdown in December as Bitcoin’s price dropped from its peak of over $108,000 to around $93,000 by the end of the year.

Pythagoras’ other funds also performed well in 2024. The Arbitrage Strategy delivered a 3% return in December, finishing the year with an 18% overall return and $45 million in AUM. The Quant Long Short Fund earned a 30% return with $23 million in AUM, while the Absolute Return Strategy produced a 41.7% return, attracting $158 million in client assets. Pythagoras announced that the Absolute Return Strategy will close to new investors starting February 1, 2025.

Overall, the combined AUM of Pythagoras’ four funds grew from $80 million in 2023 to over $230 million by the end of 2024, fueled by a surge in investor confidence amid the ongoing bull market.

Looking to the future, Pythagoras maintains a positive outlook for the market, driven by supportive regulatory changes in the U.S. and growing corporate adoption of Bitcoin. Mitchell Dong, CEO of Pythagoras, believes that the incoming Trump administration’s proposal to create a national Bitcoin reserve, along with the appointment of crypto-friendly individuals in key positions, will be a significant catalyst for the industry. He also pointed out that over 290 pro-crypto members of Congress could pave the way for legislation that supports the growth of the cryptocurrency sector.

Dong suggested that if the U.S. moves forward with establishing a national Bitcoin reserve, other countries may seek to accumulate Bitcoin ahead of the U.S. Meanwhile, he predicted that more publicly listed companies could follow in the footsteps of MicroStrategy, adding Bitcoin to their corporate balance sheets.